As a DGA you can borrow money from your own BV to buy a house. That sounds attractive: you use resources that are already in your company and the interest rate flows back to your own company. But the tax and legal rules around a DGA mortgage are strict. In this article we explain clearly when you can do this, how much you can borrow, what you have to arrange, how interest and repayment work and what tax consequences there are, including the important limit of € 500,000 and the exceptions for home ownership loans.
When can you provide yourself a mortgage from your BV?
In principle, you can take out a loan from your BV to yourself, but only if this loan takes place under business conditions. In concrete terms, that means: there must be a formal loan agreement, collateral (the property) must be included, and interest, duration and repayment must be comparable to what a commercial loan requires. Without business design, the loan runs the risk of being regarded by the tax authorities as a disguised profit benefit, with tax consequences.
How much can you borrow privately from the BV?
The law excessively borrowing at your own company sets a limit: in principle a ceiling applies per person € 500,000 For loans from the BV. Being above this maximum can be considered as an income/ substantial interest and lead to taxation. However, an important exception applies to a home loan: a loan that really qualifies as a home acquisition debt (so fully meets the conditions for mortgage interest deduction: annuity or linear repayment within 30 years and business conditions) can exceed that € 500,000 without a direct box-2 tax.
Note: debts at multiple BVs count together; The limit applies per taxpayer (applied jointly for tax partners).
What should I arrange if I want to enter into a mortgage from the BV?
A DGA mortgage requires careful recording and implementation. The most important steps are:
- Formal agreement: Set a written loan agreement in which interest, duration, repayment and other conditions are clearly laid down.
- Registration mortgage rights: Record the mortgage right on the property with the notary and have this registered in the Land Registry, the same process as at a bank mortgage.
- Determine business interest: Choose a competitive interest rate. A too low or too high interest can lead to corrections by the tax authorities.
- Repayment schedule: Ensure an annuity or linear schedule with full repayment within 30 years to be eligible for mortgage interest deduction in box 1.
- Administration: Enter a tight administration: payments, invoices and depreciation must be demonstrable. The loan must be specified correctly in the declaration annually.
- Advice and notary: Enable a tax specialist and notary to test the agreement and to structure securely for tax purposes.
Is a mortgage always beneficial to yourself?
No, it is not automatically cheaper than a regular bank mortgage. Advantages are clear: you use your own resources, you retain control and the interest rate flows (partly) back to the company. There are also disadvantages and points for attention:
- Liquidity of the BV: Do you use the resources in your BV for business activities or investments? The use of that capital can become the growth or continuity of the company.
- Tax effect: The interest is deductible in Box 1 in private, but in the BV the interest is actually taxed as a profit. Net benefit depends on the difference between private and corporation tax rates.
- Costs and hassle: Notary, advice and additional administration costs time and money. For smaller loans, those costs outweigh relatively heavier.
- Risks: In the event of errors, the Tax Authorities can lift, with potentially substantial financial consequences.
A DGA mortgage is therefore situational: good to consider if you are superfluous for business operations and you strictly comply with the tax and legal requirements.
What about interest and repayment?
The interest must be businesslike and in line with the market. The interest paid is deductible for you in Box 1 if the loan qualifies as a home loan and the repayment requirements are complied with. Repayment must take place in accordance with the agreed schedule; Paper appointments without actual payments do not comply. Not repaying or unclear agreements make the loan vulnerable to qualification as a profit benefit.
What is the tax benefit if you take out a mortgage with your BV?
The main tax advantage is that mortgage interest in box 1 is deductible, so you pay less income tax on your taxable income. At the same time, the BV generates interest income that are liable for corporation tax. In some situations you can structure the total tax pressure more favorably through combination of salary, dividend and interest, but this requires customized advice. The net tax result depends on your personal rate, corporation tax rate and the competitive interest rate.
How much debt can I have my own BV?
In summary: the general legal limit is € 500,000 for loans at the own company; Amounts above that ceiling can lead to tax as income. A home loan that meets the conditions for mortgage interest deduction can exceed that amount, provided that the loan has been designed for business and the repayment obligation is met. Always check whether all your agreements are demonstrable and feasible, the tax authorities can correct on the basis of form and content.
Conclusion
A mortgage from your own BV can be attractive and efficient, but is anything but simple. The loan must be arranged for business, fully recorded and strictly complied with. The tax benefits exist, but do not automatically outweigh a regular mortgage at a bank. Get advice from a notary or tax specialist before taking steps. This way you prevent smart financing from turning into an expensive miscalculation.
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